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Dow Jones Newswires, 21 July 2017 04:14
Global Forex and Fixed Income Roundup: Market Talk


0814 GMT [Dow Jones] The September Gilt future contract, currently trading at 126.27, remains on the upside above the rising 50-period moving average at 126.20 on a 30-min chart. Moreover, the intraday RSI stands within its buying area between 50 and 70 and confirms the bullish bias. As a consequence, further advance is expected with the previous overlap at 126.70 as a first target and 127.18 in extension. A third target is set at the strong horizontal resistance at 127.50. Only a break below the strong horizontal support and overlap at 125.85 would turn the intraday outlook to bearish with a first alternative target set at 125.62 and a second one set at 125.11 in extension. [This piece contains the opinions of Trading Central and does not constitute personalized investment advice or form part of any invitation or inducement to buy or sell any security. The author has been prohibited by Trading Central from purchasing or otherwise directly or indirectly acquiring any direct or indirect beneficial ownership of any instruments or markets for which Trading Central or its affiliates issues recommendations. To read more, visit bit.ly/1MehCU9.] ([email protected])

0812 GMT [Dow Jones] Currently trading at JPY 145.16, the British pound remains on the downside, capped by the declining 50-period moving average at JPY 145.35. Moreover, the intraday RSI stands within its selling area between 50 and 30. A first target to the downside is set at yesterday's bottom at JPY 144.65. A break below this threshold would open the way towards the previous overlap at JPY 144.10 and towards the horizontal support at JPY 143.20 in extension. Only a rebound above the horizontal resistance at JPY 145.70 would turn the outlook to bullish with a first alternative target set at the strong horizontal resistance at JPY 146.25 and towards JPY 146.70 in extension. [This piece contains the opinions of Trading Central and does not constitute personalized investment advice or form part of any invitation or inducement to buy or sell any security. The author has been prohibited by Trading Central from purchasing or otherwise directly or indirectly acquiring any direct or indirect beneficial ownership of any instruments or markets for which Trading Central or its affiliates issues recommendations. To read more, visit bit.ly/1MehCU9.] ([email protected]) (END)

0802 GMT - Eurozone periphery government bond spreads over German bunds continue to narrow early on Friday, triggered by the European Central Bank retaining the easing bias on its asset purchases. The pace of narrowing in Spanish and Italian spreads is slower than on Thursday, however, suggesting the gains might soon run out of steam. The 10-year Italian and Spanish bond spreads over bunds both trade 2 basis points tighter at 156 and 93 basis points, respectively, while Portuguese spreads over bunds trade about 4 basis points narrower at 243 bps, according to Tradeweb. ([email protected] ; @EmeseBartha) (END)

0742 GMT - The Turkish lira weakens against the dollar after the political tension between Germany and Turkey as Germany said it would take new steps in response to Ankara's crackdown on human-rights activists, escalating a travel alert and reconsidering an investment program. Fitch is also scheduled to review Turkey's sovereign rating today. It cut the sovereign rating by one notch to BB+ on Jan. 27, with neutral outlook. "We think they are unlikely to make any change in the rating or outlook," says TEB, a unit of BNP Paribas. USD/TRY last trades up 0.2% at 3.5348, according to Factset. ([email protected]) (END)

0736 GMT - The German bund and bund futures trade slightly firmer early on Friday after the European Central Bank was more dovish than expected by many bond market participants at its policy meeting on Thursday. Still, Helaba analysts believe the gains in bunds could be limited. The 10-year bund yield trades at 0.52%, down from Thursday's close at 0.53%, according to Tradeweb. The bund futures trade at 162.29, up 0.36. Bond yields fall as prices rise. ([email protected] ; @EmeseBartha) (END)

0734 GMT The euro continues where it left off on Thursday, rising to another near 2-year high versus the dollar and eight-month high against sterling. Euro gains after Thursday's European Central Bank meeting kept intact expectations of monetary stimulus being scaled back. The dollar weakens on concerns about the U.S. Trump administration, while sterling falls on worries about lack of progress in Brexit talks. The market has "got it in its head" that an ECB announcement on plans to taper stimulus "is definitely going to be September," says Richard Wiltshire, chief FX broker at ETX Capital. The conclusion: "so buy euros." Euro/dollar rises to $1.1679, highest since August 2015. Euro/sterling rises to 0.8993, just shy of 0.90. ([email protected])


0720 GMT - Up modestly by midday in Asian trading, the dollar has slid to session lows as European action has gotten under way as the currency continues to get roughed up. The WSJ Dollar Index set a fresh 9 1/2-month low Thursday as the euro logged its best level in late New York trading since January 2015 at $1.1632. The euro is now above $1.1665 while the WSJ Index is off 0.1%. Trump investigations continue to weigh, analysts say. "US political uncertainty is now having an outright dampening effect on investor sentiment," says Viraj Patel, forex strategist at ING in London. ANZ strategist Irene Cheung adds White House issues "could draw its focus away from economic reforms." ([email protected]) (END)

0703 GMT - Stronger-than-expected demand for exports in 2017 prompts the Asian Development Bank to nudge up its 2017 economic growth forecasts for Asia ex-Japan by 0.2 percentage points to 5.9% from its April projections. China is projected to grow 6.7% instead of 6.5%, helped by strong exports and robust domestic consumption. Malaysia gets the biggest bump -- to 4.7% from 4.4% -- largely on a double-digit jump in fixed investment, though the ADB also expects faster growth to come with higher inflation of 4.0% there. Elsewhere in the region, the recent global phenomenon of improving growth and weaker inflation is seen playing out, with prices rising more slowly than expected in April. ([email protected]) (END)

0651 GMT - Japan stocks spend today's trading down modestly, and in the process resulted in a 19-point drop this week for the Nikkei. It fell 0.2% today at 20099.75 as the yen continued to rebound, getting to Y111.70/dollar from Y112 during morning trading. Even though it didn't come as a surprise to many, analysts say some investors sat on the sidelines today following the BoJ's implication that it is in no hurry to exit easing measures. Meanwhile, it was quiet in the bond pits, with yields on the benchmark 10-year JGB remaining at 0.07%. ([email protected]; @SuryatapaB) (END)

0650 GMT - The U.K.'s FTSE 100 index is seen opening flat at 7487, according to London Capital Group, calming after sharp gains on Thursday and as many Asian stock markets traded lower. A small recovery in the pound against the dollar may temper enthusiasm for U.K. stocks. Still, stocks could pick up on any further pound weakness against the euro, which surged on Thursday after a European Central Bank meeting kept intact the prospect of monetary stimulus being scaled back. A lack of progress in Brexit talks weighs on the pound, leaving it near GBP0.90 to the euro. Vodafone shares in focus after reiterating its full-year outlook, as well as BP after saying it is in talks to sell North Sea assets. U.K. public finances data due at 0830 GMT.([email protected]) (END)
0607 GMT - RBC chief strategist Adam Cole doesn't expect today's pullback in the Aussie dollar to extend that far. "Despite the sharp correction of recent gains, we would caution against turning too bearish" since "much of its recent strength has been due to the outright level of yields." The Aussie, which hit 2-year highs this week versus the US dollar, is down 0.5-0.7% against major global currencies today. ([email protected]; @JamesGlynnWSJ)
(END)


0552 GMT - Australia's central bank was clearly concerned about tighter monetary conditions there following Tuesday's release of the July meeting minutes, says RBC senior economist Su-Lin Ong. RBA Deputy Gov. Guy Debelle made that clear when he moved at a speech today to tell markets there's no significance to the central bank noting research that estimates neutral interest rates being 2 percentage points above current levels. While noting folks can "make up their own minds as to the significance of the neutral discussion," Ong says, "The fact that the RBA seemingly regrets making that discussion public is a clear-enough sign that it was unhappy with the tightening in financial conditions that ensued." The Aussie dollar is down some 0.6% across the board but well off session lows. ([email protected]; @JamesGlynnWSJ)
(END)


(END) Dow Jones Newswires
 
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Dow Jones Newswires, 24 July 2017 05:38
Global Forex and Fixed Income Roundup: Market Talk


0938 GMT - Sterling/dollar trades up 0.3% at $1.3035, and Morgan Stanley forecasts it could rise further to $1.33. Once there, sterling would become a "strategic sell," however. "The next leg up of GBPUSD is for sale." Sterling is likely to rise as investors price in Prime Minister Theresa May accepting a longer-term transition for Brexit. Still, it will become a sell because of concerns that the U.K. economy "seems headed for a sharp slowdown as investment and consumption both worsen simultaneously", after being the second fastest growing G10 economy in 2016, the bank says. The International Monetary Fund has downgraded its 2017 U.K. economic growth to 1.7%, from a 2% forecast previously. ([email protected]; @OlgaCotaga)

0922 GMT - Volkswagen's large cash pile, as well as the potential sale of transmissions maker Renk, should help it deal with a potential cartel fine on German carmakers, Kepler Cheuvreux credit research says. German magazine Spiegel reports that carmakers may have colluded on technology, costs and suppliers. VW is Europe's second most cash-rich corporate after Electricite de France, holding EUR29.2 billion of cash, according to a recent Moody's report that cites end-2016 figures. Kepler keeps its buy recommendation on VW bonds. ([email protected], @tasosvos) (END)

0921 GMT - The Swiss franc's recent rise against the dollar doesn't seem to have spooked the Swiss National Bank yet. Sight deposits at the SNB--which analysts see as a proxy for intervention--averaged 579.1 billion francs ($612 billion) last week, little changed from the previous week and fairly stable in recent months. This may be because while the franc has strengthened against the dollar, it has weakened against the euro which is more important for Swiss exports, imports and inflation. Dollar trades at 0.9454 francs, staying not far above Friday's near two-year lows around 0.9438. ([email protected]) (END)

0920 GMT - Although industry lobby groups have been pressuring the central bank to cut rates, such a move is unlikely to help strengthen economic growth significantly, says DBS. It notes bank-loan growth slowed in May, indicating demand is weak and bank lending may not rise even if borrowing costs fall. DBS add that recent cuts in lending rates have been more a result of surplus cash in the banking system following the November cash ban rather than central-bank action the past couple years. ([email protected])
(END)


0912 GMT - Now that Efiag has managed to print a second bond, Swiss investors may start warming up to the name, Vontobel says at is changes its recommendation to the issuer's inaugural 5% 2021 to outperform from market perform. Efiag is a bond-issuing entity, raising debt to on-lend it to its shareholders: mid-size Swiss banks. While Swiss investors are unlikely to move their focus away from "tried and trusted" borrowers, Efiag's bond issue should become more interesting to longer term investors, analyst Gerhard von Stockum says. ([email protected], @tasosvos) (END)

0910 GMT - From a purely mechanical perspective, a move by Fitch Ratings to upgrade Spain to 'A-' would not necessarily result in increased demand for Spanish bonds, say Rabobank rates strategists after Fitch's revision of Spain's rating outlook to positive from stable on Friday. Spain is rated at investment grade anyway and so it won't suddenly become eligible for a wider number of the major indices, Rabobank says. However, discussions with clients suggest that an upgrade to 'A-' would be psychologically significant and signal that Spain is on a pathway to be being considered as semi-core, akin to Ireland, and would continue to support arguments that the current spread tightening should be supported. ([email protected]; @EmeseBartha) (END)

0855 GMT - South Korea's GDP growth likely cooled somewhat in 2Q, say market analysts surveyed by WSJ, but is seen still staying on trend. The median forecast is for 0.6% sequential GDP growth, versus 1Q's 1.1% increase. "Exports didn't maintain their burly 1st-quarter pace as a blip in tech demand and slower Chinese demand hurt shipments," notes Moody's Analytics. But it and most others expect Korea to see support from improving global demand and the government's proposed extra spending. The data are due Thursday. ([email protected]; @kwanwoo) (END)

0853 GMT [Dow Jones] Currently trading at 149.11, the French September OAT contract remains on the upside, supported by the rising 50-period moving average at 148.92. Furthermore, the 30-min RSI stands within its buying area between 50 and 70 and confirms the bullish bias. As a consequence, further advance is expected with a first target set at the horizontal resistance at 149.54. The upside breakout of this threshold will open the way to further rise towards 149.90 and towards the horizontal resistance and previous overlap at 150.35. Only a downside breakout of the horizontal support at 148.65 would invalidate this bullish scenario. In this case, a bearish acceleration towards the horizontal support at 148.30 and towards 148.10 would be in the cards. [This piece contains the opinions of Trading Central and does not constitute personalized investment advice or form part of any invitation or inducement to buy or sell any security. The author has been prohibited by Trading Central from purchasing or otherwise directly or indirectly acquiring any direct or indirect beneficial ownership of any instruments or markets for which Trading Central or its affiliates issues recommendations. To read more, visit bit.ly/1MehCU9.] ([email protected]) (END)

0852 GMT [Dow Jones] Currently trading at $1.3019, the British pound is rebounding and stands above the rising 50-period moving average at $1.2996. Moreover, the intraday RSI stands within its buying area between 50 and 70, which confirms the bullish bias. Therefore, a first target is set at the horizontal resistance at $1.3030. A break above this threshold would open the way to further rise towards the horizontal resistance and overlap at $1.3055 and towards $1.3085 in extension. Only a break below the horizontal support at $1.2985 would turn the intraday outlook to bearish with a first alternative target set at July 21 bottom at $1.2965 and towards the strong horizontal support and July 20 low at $1.2930. [This piece contains the opinions of Trading Central and does not constitute personalized investment advice or form part of any invitation or inducement to buy or sell any security. The author has been prohibited by Trading Central from purchasing or otherwise directly or indirectly acquiring any direct or indirect beneficial ownership of any instruments or markets for which Trading Central or its affiliates issues recommendations. To read more, visit bit.ly/1MehCU9.] ([email protected]) (END)

0822 GMT - Singapore's central bank keeping inflation forecasts unchanged is an indication no rate change is likely at the next meeting in October, says UOB says. In a statement that accompanied today's June CPI data, the central bank and the government said weakness in local labor markets will limit cost inflation even though current economic conditions are better than last year. The "absence of upside risks" to core inflation will allow the central bank to stay neutral on the Singapore dollar's nominal effective exchange rate, says UOB. ([email protected]) (END)

0814 GMT - Germany's PMIs for July come in weaker than forecast, as private-sector output growth slowed for the second straight month. Germany's manufacturing PMI hit a 3-month low of 58.3, the services PMI dropped to a 6 -month low of 53.5. As a consequence, the composite PMI fell to 55.1, a 6-month low. Output and new orders increased at the slowest rates since January, according to IHS Markit, which compiles the data . "The flash PMI signaled a further easing in the pace of German economic expansion entering the second half of 2017," says Trevor Balchin, an economist at the company. But the slowdown in July follows "the strongest quarter in six years," and Germany's manufacturing sector continues to expand at "a historically sharp rate ," he adds. ([email protected]) (END)

0809 GMT - The July composite PMI for the eurozone came in significantly weaker than expected, falling to 55.8 from June's 56.3 to reach its lowest level in six months. The consensus forecast had been for a very marginal dip to 56.2. The decline in the measure, which was driven by manufacturing, suggests the second half of the year may not be as strong as the first, and that in turn may ease pressure on the ECB to taper quickly. The details on inflation reinforced that message of caution, with prices charged by businesses rising at the slowest pace since January. ([email protected] , Twitter: @PaulHannon29) (END)

(END) Dow Jones Newswires
 
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MONDAY, JULY 24, 2017
TOP NEWS
IMF keeps global growth forecasts; China, eurozone revised higher
The International Monetary Fund kept its growth forecasts for the world economy unchanged for this year and next, although it slightly revised up growth expectations for the eurozone and China. In its updated World Economic Outlook, the IMF said global gross domestic product would be 3.5 percent in 2017 and 3.6 percent in 2018. It upgraded GDP projections for the euro area for 2017 to 1.9 percent, 0.2 percentage point higher than in April. For China, the IMF said it now expected stronger growth of 6.7 percent in 2017.

Japan manufacturing growth dips to 8-month low as export orders stall-flash PMI
Growth in Japan's manufacturing activity slowed for the second straight month in July, a preliminary private survey showed, as export demand stagnated. The Markit/Nikkei Japan Flash Manufacturing Purchasing Managers Index fell to 52.2 in July on a seasonally adjusted basis from a final 52.4 in June. The preliminary index for new export orders fell to 50.0 from 53.4 in June. The output component fell to 51.4 from a final 52.2 in June. On the positive side, the employment index rose to a preliminary 53.4 from 53.2 in the previous month.

UK households face sharpest squeeze in three years - IHS Markit
British households' financial situation has deteriorated at the fastest rate in three years this month, as families increasingly shy away from big purchases like cars, holidays and household appliances, a survey showed. Financial data company IHS Markit said its monthly Household Finance Index dropped to 41.8 from June's 43.7, its lowest since July 2014, reflecting an ongoing squeeze on household incomes as inflation rises faster than wages. IHS Markit said just 27 percent of the households it surveyed expected rates to rise in the next six months, the lowest proportion since October.

Australia inflation bogeyman still fast asleep in Q2
Australia's core inflation rate is expected to have stayed below target for a sixth straight quarter through April-June, a reminder of just why interest rates in the country are at record lows and set to remain there for months to come. Analysts polled by Reuters forecast consumer prices rose around 0.4 percent in the second quarter, from the first, which would nudge the annual pace up a tick to 2.2 percent. Housing and health likely saw costs rise, while petrol and car prices fell in the quarter.



ANALYSIS

China's debt spectre could haunt Fed's policy meetings

In September 2015, the U.S. Federal Reserve cited risks from China as a key reason for delaying its first interest rate hike in a decade. A wall of Chinese debt maturing in the next few years could jolt the country back into the U.S. central bank's policy deliberations.



OUTSTANDING DOLLAR BONDS IN CHINA


MORNING MEETING


BOJ REDUCES OP SIZE, EUROYEN SOLD OFF

BONDS, EQUITIES, OTHER ASSET MARKETS

US Tsy 10s @2.238%, JGB10s 0.06%
• BoJ reduces size of 5y-10y JGB buying op by ¥30bn
• JGB futures fall to 150.18, but drop quickly stalls
• JGB 40s heavy ahead of tomorrow's 40yr auction
• Euroyen sold off, TL spreads widen as Tibor fixings come out unch
• Some had expected lower Tibor when Tibor reforms come into effect today
• At 150.25, futures up 3 ticks on day, range 150.29/150.18
• Nikkei -0.9%, SSEC +0.2%, HSI +0.5%, STI -0.2%, TWI flat
• ASX -0.8%, NZX50 flat, KOSPI -0.2%
• Light crude futures +0.11% at USD45.82
• Dalian iron ore futs -1.5%, LME 24hr copper flat

Currency Summaries
JPY
• USD/JPY opened Asia 111.15 and came under early pressure
• AUD/JPY and USD/JPY out of early Tokyo pushed the pair through 111.00
• The Nikkei was down around 0.90% to encourage AUD/JPY selling
• USD/JPY fell to the base of the daily I-cloud at 110.77 before getting support
• The USD/JPY retraced the early losses back t 111.09 before sellers returned
• Heading into the afternoon it was trading around 110.95
• IMM data Friday showed spec JPY shorts rose to 127 K contracts or US $14.1 BLN
• Large build-up of USD/JPY longs leaves the pair vulnerable in the short-term
• A test of 110.00 possible if equities and US yields continue to sag

EUR
• EUR/USD opened Asia at 116.63 after building on post ECB gains on Friday
• EUR/USD edged higher in early Asia when USD/JPY led USD broadly lower
• It traded to 1.1684 before sellers at 1.1685 discouraged attempts higher
• It drifted back to 1.1683 when there was light EUR/JPY selling out of Tokyo
• Heading into the afternoon EUR/USD was trading around 1.1675
• EUR/USD is trending higher and showing no sign of topping out yet
• Support now at former resistance around 1.1615
• Sellers ahead of 1.1700 may temper rise with minor resistance at 1.1715
• EZ flash MFG PMI the key data event in Europe today

GBP
• Cable holding tight 1.2998/1.3015 range thus far, last at 1.3010
• EUR/GBP modest 0.8969/0.8984 range in Asia

Market Briefs
• Japan Jul Flash Mfg PMI fell to s/adj 52.2 vs 52.4
• Preliminary index for new export orders fell to 50.0 vs 53.4
• Japan PM Abe denies favours for friend amid falling support
• IMF keeps global growth forecasts; China, eurozone revised higher
• Australia Q2 CPI seen rising 0.4 pct q/q, 2.2 pct y/y
• UK households face sharpest squeeze in three yrs -IHS Markit
• Monthly Household Finance Index dropped to 41.8 from June's 43.7
• China's debt spectre could haunt Fed's policy meetings [nL8N1K31FW]
• Speculators sour on U.S. dollar, yen shorts press on -CFTC

Looking Ahead - Economic Data (GMT)
• 07:00 FR Jul Markit Comp Flash PMI, 56.40 eyed, last 56.60
• 07:30 DE Jul Markit Comp Flash PMI, 56.30 eyed, last 56.40
• 08:00 EZ Jul Markit Comp Flash PMI, 56.20 eyed, last 56.30

Looking Ahead - Events, Auctions, Other Releases (GMT)
• N/A EU economic and financial affairs council meeting in Brussels
• 10:00 BE 6Y E1.0/1.0/1.0 bln for 6/10/30 yr auctions
See North American Open for a detailed listing of US/NorAm releases, events.

Week Ahead-FOMC, RBA's Lowe, US earnings & politics
The FOMC decision Weds will likely be a non-event for markets as the Fed will keep policy unchanged and there is no update on Fed forecasts or press conference. The statement will be scrutinized for any change in outlook and hints on when the Fed will start trimming its balance sheet, but is unlikely to hold any surprises. RBA Gov Lowe speaks Weds and will likely echo Dep Gov Debelle's Fri comments that the RBA didn't signal the start of an imminent tightening cycle by including the theoretical "neutral rate" in July's minutes. Lowe will also likely repeat the RBA's mantra on the negative impact of a higher AUD. US earnings season kicks into high gear with nearly 200 S&P 500 companies reporting, including Alphabet, Amazon, McDonald's & Caterpillar. So far 73% of companies reporting have beaten forecasts. Events in Washington DC will be watched for news related to the Russia probe after President Trump declared Sat he has "complete power to pardon". Senate Republicans hope to have another vote on their flailing healthcare plan, but weekend reports indicate they remain divided on key aspects of two different plans being discussed.

Week Ahead-US & UK Q2 GDP, EZ flash PMIs, Aus CPI
The week ahead is busy for US data despite few tier-one releases that will influence Fed expectations until Friday's Q2 GDP. The (less-followed) Markit flash PMI data and existing home sales are due Mon, Case-Shiller home prices and consumer confidence Tues, new home sales Weds, followed by building permits and durable goods Thurs. Finally on Fri, the market will digest the Uni of Michigan sentiment survey and take a first look at US Q2 GDP. Euro zone data includes Monday's closely watched flash PMIs for July and the German Ifo Tues. German & French CPI are due Fri, along with EZ sentiment data where the focus will be on consumer sentiment & inflation expectations. The main event in the UK will be Q2 advance GDP Weds. Japan's key releases are CPI, unemployment, household spending and retail sales, all on Fri. In Australia, Q2 CPI on Weds will be the main focus as RBA expectations are at an inflection point.

 
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Dow Jones Newswires, 25 July 2017 02:51
Global Forex and Fixed Income Roundup: Market Talk


0651 GMT - BMI Research now thinks India central bank will undertake a quarter-point rate cut no later than March, versus previously anticipating no such move this FY. That as record-low inflation has created room for the central bank to support weak growth in the industrial sector, notes the firm, whose FY inflation view has been slashed to 3.5% from 4.8%. ([email protected])

0650 GMT - Societe Generale strategists are "not entirely comfortable" with the new Greek five-year bond, set to be launched today, and recent debt maturities are one of the reasons behind this. In order for Greece to repay the July 2017-maturing bond, one of the two notes it printed in 2014, it had to use bailout money, disbursed just ten days before maturity after a long period of bailout review talks. During the standoff between the Greek government and its creditors in early 2017, bid yields on the July-maturing issue surpassed 15%, according to Tradeweb. ([email protected], @tasosvos) (END)

0637 GMT - The 0.5% level was a key barrier when 10-year German government bond yields were on the way up and prices when falling. Now that the opposite takes place, 0.5% is again a key yield level, Commerzbank says. But the bund market looks poised to be rather boring in the near term, as market participants switch to summer mode, even the European Central Bank, which reduced public sector bond purchases by a tenth last week, the German bank adds. Bund yields are at 0.503% in early Tuesday trading. ([email protected], @tasosvos) (END)

0628 GMT - Japanese stocks were down slightly throughout the afternoon and finished there amid a rebound in the yen. The dollar fell back below Y111 after having started stock trading today around Y111.25. That helped push the Nikkei down 0.1% to 19555.20. Among the laggards was Nintendo, which fell 2.6% ahead of tomorrow's quarterly report. Analysts largely remain upbeat on the firm amid the strong debut for Switch. Nintendo's "unique and new strategy to launch a new console" outside of the holidays and "with a staggered game pipeline appears to be working very well," says Jefferies. ([email protected]; @SuryatapaB) (END)

0623 GMT - Valuations in French government bonds, especially in eight to 10-year maturities, look increasingly unattractive versus eurozone peers Austria, Finland and the Netherlands, Natixis Asset Management says. And with the Japanese investors-who sold OATs heavily before the presidential election-back to buy mode in the French market, it could be time to sell some French debt, the asset manager argues. The gap between 10-year French and German government bond yields currently stands at 24.4 bps, according to Tradeweb. It approached 80 bps in February when fear of far-right Marine Le Pen winning the presidency ran high. ([email protected], @tasosvos) (END)

0611 GMT - Australians are carrying less cash amid ever-increasing use globally of electronic payments. The latest research from the Reserve Bank of Australia found the median value of cash held in consumers' wallets has fallen to A$40 from A$55 in 2013. Meanwhile, some 20% of respondents didn't have any bills or coins, versus 8% in 2013. Conversely, 1/3 had at least A$100. Older Australians tend to carry more than twice that of the young. ([email protected]; @JamesGlynnWSJ) (END)

(END) Dow Jones Newswires
 
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TUESDAY, JULY 25, 2017
TOP NEWS
BOJ minutes: members contest disclosure of exit strategy impact
Bank of Japan policymakers contested how much information to disclose about a possible exit from quantitative easing, with several worrying about the risks of doing so given the BOJ is still far off its 2 percent inflation goal, minutes of the central bank's June 15-16 meeting showed. Some members said the BOJ needed to clearly explain how it would manage policy and how an exit would impact the central bank's finances, the minutes showed.

China's second-half GDP growth seen at around 6.7 pct - official think tank
China's economy is likely to grow at an annual rate of around 6.7 percent in the second half of 2017, slowing slightly from the first half of the year, the State Information Center (SIC) said. The State Information Center forecasts full-year growth of around 6.8 percent, it was reported as saying by the the state-owned China Securities Journal. The SIC said the small decline would reflect a number of factors including a slowdown in export growth and a cooling of investment in the real estate market. "The emerging service industry will maintain good growth momentum," said the SIC.

UK's Boris Johnson plays down Conservative rift, NZ near top of trade deal queue
Britain's Foreign Secretary Boris Johnson appeared to deny there was any infighting within the governing Conservative party during a visit to New Zealand, where he said the country was near the top of the queue for a trade deal post-Brexit. Johnson said that no one would be worse off as a result of Brexit including New Zealand. He said New Zealand was near the front of the queue for a trade deal with Britain once the latter left the European Union.

BoE says more defences may be needed against consumer credit
The Bank of England said on Monday it could force banks to hold more capital as an "insurance policy" to protect the wider economy in case the rapid growth in consumer credit turns sour. Alex Brazier, the BoE's executive director for financial stability, said that while lending overall has grown in line with the British economy, outstanding car loans, credit card balances and personal loans have risen by 10 percent, far outpacing rises in income. In a period of good economic performance, banks think they can reduce prices and loosen lending criteria, he said.


Euro zone cash may be moving back to riskier assets -ECB's Frank Smets
Investor cash in the euro zone may be starting to flow back into riskier assets on the bloc's periphery, playing a key part in the recent tightening of bond spreads, a top European Central Bank economist said on Monday. With investors preferring to keep their cash in safer countries, money had been flowing into the bloc's core members such as Germany and the Netherlands for years. "Why isn’t this money circulating back to Italy or to Spain?" Frank Smets, the Director General of the ECB's economic department said in a lecture at the Ifo Institute.



U.S. HOME SALES


MORNING MEETING


LONG-END JGBS FIRM AFTER GOOD 40YR AUCTION

BONDS, EQUITIES, OTHER ASSET MARKETS

US Treasury 10s indicated 2.248%, JGB 10s 0.067%, Bund 10s 0.502%
• US-Japan-Germany respective 2s indicated 1.363%, -0.113%, -0.664%
• JGB yld curve flattens as 40-year auction goes well
• 40s auction stops at 1.045% (comp yld), or 1.068% simple yld, vs 1.075% in AM.
• 40s firm to 1.065% (simple yld) post-auction
• At 150.27, futures up 2 ticks on day, range 150.30/150.24
• Nikkei range 19,941-20,036, at 19,971 off 4 points on day
• Nikkei in relatively tight ranges around 20k since 20,318 on June 20
• AXJ mixed - SSEC, HSI, KOSPI and TWI all around par on day
• STI +0.4%, Sensex +0.3%, ASX +0.9% and NZX50 +0.2%
• Dalian iron ore +3.4%, Tokyo rubber +1.6% on day

Currency Summaries
JPY
• USD/JPY bid on higher US yields o/n, Gotobi Tokyo fix demand, to 111.34
• Off later as demand sated, US yields ease back some from higher levels early
• USD/JPY to 111.02, USD562 mln option expiries at 111.00-10 supportive
• More expiries below at 110.50 – USD467 mln, above ntg big till 111.91-112.30
• Talk Tokyo bids trail down into 110 handle, hourly Ichi kijun 110.98
• Ichi daily cloud base 110.80, 55-HMA 111.25, 111.66, 112.04 100/55-DMAs
• EUR/JPY rangebound, Asia 129.38-57, large E761 mln option expiries at 130.00
• Cross seen pivoting around daily Ichi tankan at 129.50 today
• Other crosses in holding pattern too, GBP/JPY 144.58-98, CAD/JPY 88.76-99
• AUD/JPY 87.94-88.21 and NZD/JPY 82.34-77, latter larger on thin conditions

EUR
• EUR/USD opened Asia at 1.1643 after a quiet US session
• It eased to 1.1631 before USD went broadly offered late in the Asian morning
• The EUR/USD traded to 1.1664 and was around 1.1660 heading into the afternoon
• Technical reading remain bullish and trend continues to point north
• Resistance ahead of 1.1685 and break targets 38.2 of 1.3995/1.0340 at 1.1735
• Support at former resistance levels at 1.1616 and 1.1585
• German IFO is the key data event in Europe today

GBP
• Cable sees some to-fro but in thin conditions, Asia 1.3014-32
• Support eyed on dips towards 1.3000, high yesterday 1.3058
• EUR/GBP quiet too, Asia 0.8936-45

Market Briefs
• PM Abe advisor Hamada favours reappointment of BOJ Gov Kuroda - Nikkei
• BOJ minutes - Most agreed need to remain easy
• 2% inflation target still distant, some noted importance of explaining exit
• China's second-half GDP growth seen at around 6.7 pct - official think
• Boris Johnson plays down Conservative rift, NZ near top of trade deal queue
• EZ recovery promising but ECB accommodation still needed: Mersch
• Trump son-in-law details Russia contacts, denies collusion

Looking Ahead - Economic Data (GMT)
• 06:00 DE Jun Import Prices, -0.70% m/m/, 2.90% y/y eyed; last -1.0%, 4.10%
• 06:45 FR Jul Business Climate, 108.00 eyed, last 108.00
• 08:00 DE Jul Ifo Business Climate, 114.90 eyed, last 115.10
• 08:00 DE Jul Ifo Expectations, 106.50 eyed, last 106.80

Looking Ahead - Events, Auctions, Other Releases (GMT)
• 17:00 BOE's Andy Haldane speaks at The Finance Foundation Annual Lecture
• N/A U.S. Federal Open Market Committee starts its two-day meeting
• 09:30 UK 30Y 2.50 bln auction
See North American Open for a detailed listing of US/NorAm releases, events.

DXY-Some see value but charts say too early
There is talk in the market that a few leveraged funds see the USD decline as stretched and due for a correction. The view is partly based on too many negatives getting priced into the USD while the market might be overestimating how hasty the ECB will be in normalizing policy. Any combination of a surprise passing of a US healthcare bill, unexpectedly hawkish commentary at Wednesday's FOMC or less hawkish commentary from the ECB due to concerns over EUR strength could lead to a USD correction higher. But the technical picture for the DXY remains decidedly bearish. Both short and medium-term moving averages are aligned in a bearish formation and there isn't any significant support until the May 3, 2016 low at 91.92. Chart: http://reut.rs/2gY6tNT Trying to pick a bottom in the DXY is hard to technically justify at this stage. If the price closes above the descending 10-day MA (94.73 today), it would suggest downward momentum is waning and perhaps a decent correction higher is brewing.

KRW firms despite BOK's best efforts before KORUS talks
South Korea's central bank has in recent days been suspected of intervening to stem excessive appreciation of the won, amid a broad decline in the US dollar. The KRW is the strongest AXJ currency this year, up 8.3% against the USD at Tuesday's open of 1115.5. Political risk in the White House and a change in tone from global central banks, taking a cue from the Fed, have chipped away at the dollar's value. USD/KRW fell to a 2-month low of 1112.5 Mon before it was swiftly bundled higher to 1115.5, likely by agents acting on behalf of the Bank of Korea. The BOK's clandestine intervention in its currency deviates from its usual tactic of first issuing verbal warnings against FX volatility. With talks to renegotiate the US-Korea trade pact due to start next month, discretion is understandably favoured by the BOK.
 
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Tadhg Gaelach

Tadhg Gaelach

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Dow Jones Symphony - Home
Dow Jones Newswires, 26 July 2017 03:25
Global Forex and Fixed Income Roundup: Market Talk


0725 GMT - Italy's upcoming auction of a zero coupon note (CTZ) and an inflation-linked bond (BTPei) should be a "routine affair" on Wednesday, say Commerzbank rates strategists. While the offer volumes are small, and thus supportive, the linker sale may also get support from the fact that Italy's treasury has already cancelled the linker auction in August, in line with its practice in the previous years. The Italian Treasury auctions EUR1.5 billion to EUR2 billion May 2019 CTZ and EUR750 million to EUR1.25 billion 1.30% May 2028 BTPei. ([email protected]; @EmeseBartha)

0706 GMT - Societe Generale sees a "significant risk" of the first U.K. quarter-on-quarter growth estimate coming at just 0.2% when data are released at 0830 GMT. This could have a "strong impact" on market rate expectations. The consensus in a WSJ poll points to 0.3% quarter-on-quarter growth. The sterling rates curve, even longer gilts, are vulnerable to expectations of how the Bank of England will respond to a combination of high inflation--which argues for higher rates--and weakening growth--which requires an accommodative policy. ([email protected], @tasosvos) (END)

0651 GMT - Investors in the 10-year German government bond market seem keen to sell bunds after rallies until the European Central Bank communicates its QE exit plan, Commerzbank rates strategist Rainer Guntermann says. This is what seemingly happened Tuesday, when bund yields briefly dropped below 0.5% before jumping toward 0.57%. They are quoted at 0.55% in early Wednesday trading. Bunds look "vulnerable" below 0.5%, Mr. Guntermann says. Yields rise as bond prices drop. ([email protected], @tasosvos) (END)

0636 GMT - Japanese stocks maintained sold gains throughout today's trading, helped by a dollar-yen rebound amid renewed hopes about US policy-making. The Nikkei rose 0.5% to 20050.16, ending a 3-session losing streak. That as the dollar is around Y111.95, nearly a full yen above day-earlier levels. Meanwhile, JGB yields followed the overnight rise in Treasurys, with the 10-year up 1.5 basis points at 0.08%. To come later Wednesday is the FOMC statement. ([email protected]) (END)

0619 GMT - A small tweak in today's FOMC statement would be enough to implicitly signal a balance-sheet reduction announcement will come in September, say ING strategists. Last month's pronouncement said the Fed "currently expects to begin implementing a balance-sheet normalization program this year." Today's statement could say it will start "soon," ING says. The Fed would be the 1st major central bank to start reducing its balance sheet following QE. The ECB is still buying assets, the BoJ continues to maintain JGB-yield targets and the BoE has finished buying new bonds but is keeping holdings from shrinking. ([email protected], @tasosvos) (END)

0606 GMT - The Aussie dollar has been strong the past week-plus amid hopes that a rate hike might not be way far into the future. But "the message from the RBA since has been one of a steady ship," says RBC. "While markets will have a hard time pricing this, we continue to see the RBA on hold through 2018." It adds while the themes in today's speech from central-bank chief Lowe weren't particularly new, they were crystal clear. While the RBA is unlikely to ease monetary policy further given concerns about household balance sheets and financial stability, Lowe also pushed back hard on expectations the central bank will act like a sheep and follow peers in tightening. ([email protected] and [email protected]) (END)

0557 GMT - Australian annual underlying inflation remains below the 2-3% target band, at 1.8% on-year, but is past the trough, says HSBC; Taking the two main measures together this was the strongest reading for underlying inflation since 4Q 2015. HSBC expects underlying inflation to gradually move higher over 2H17 as higher commodity prices and the end of the mining investment decline flow through and support a modest lift in wage growth. HSBC expects the RBA to begin lifting its cash rate in 1Q 2018. ([email protected]; Twitter @JamesGlynnWSJ) (END)

0554 GMT - A discussion on monetary policy by RBA Gov. Philip Lowe in Sydney gave a strong message that interest rates are likely to remain on hold for some time, says CBA economist Kristina Clifton. Inflation and wages growth remain low which would typically suggest that lower rates are needed. However further rate cuts are likely to push house prices higher which poses financial stability risks. With these two competing forces in mind, as long as the labor market continues to hold up ok, Lowe is content to be patient and wait for inflation to return to target, she says. ([email protected]; Twitter @JamesGlynnWSJ) (END)

0509 GMT - Indian exporters are seeking government intervention to resolve some issues which have emerged under the newly-launched goods-and-services tax. Exporters say they foresee a liquidity crunch as their compliance costs will rise under the new tax regime. Before GST, exporters were exempt from certain taxes on inter-state movement of goods meant for exports. However, under GST, they are required to pay the tax on inter-state movements and seek refund later, a process they say often blocks working capital. "We want an exemption mechanism instead of first paying tax and then claiming refund," says Ganesh Kumar Gupta, president of the Federation of Indian Export Organizations. ([email protected]) (END)

0500 GMT - Singapore's better-than-expected June industrial production could signal that activity will remain buoyant in 2H even while slowing from 1H's rebound. Output jumped 13% from a year earlier, versus May's 4.4% gain, amid a big swing in a volatile pharmaceuticals sector. Meanwhile, production of electronics, which makes more than 1/4 of the value of total industrial output, jumped 26% from a year earlier--though that's less than some recent months. Also volatile is aerospace, and a 25% gain there allowed the transport-engineering cluster report 4.6% production growth, the first increase in some time. With more manufacturing engines cranking up, Singapore's policymakers may have one less problem to worry about. ([email protected]) (END)

(END) Dow Jones Newswires
 
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